The Euro Crisis & Bankers Bonuses ~ Dejavu Anyone?


Well Friday has arrived again and it really has been an eventful week in the world of finance, at the same time though not an original one. This week many of the financial problems of 2012 that investors thought were dead and buried, seem to have reared their ugly head once more.

The Euro Crisis

Most of the people in the European Union and in the stock markets were probably hoping that they’d seen the back of the Euro Crisis by now but this week quickly brought them back down to earth. Personally I’m amazed that the fear ever went away as nothing has really changed in the Eurozone. Eurozone economies are still not growing, the debt of Eurozone countries remains the same and the people who live in those countries aren’t exactly on board with austerity.

The only thing that calmed the markets down on the Euro was a promise from the ECB that it would buy unlimited amounts of Spanish and Italian bonds to keep bond yields down should the need arise. I wonder if they’re regretting that decision as they see Italian bond yields rise and the Italian people reject austerity.

Bankers Bonuses

Another scandal that’s been back in the spotlight this week is that of banker’s bonuses. Firstly the EU has approved a cap on the amount bankers can be paid in bonuses to one year’s salary, something which the UK is not too happy about as it probably affects the city of London more than any other city in the EU.

The story that caught my eye though was the huge loss at RBS. The UK government owned Royal Bank of Scotland made a £5.2 billion loss in the last financial year and no that’s not a typing error, BILLION! Yet in that same year they paid out over £600 million in bonuses to staff. Call me crazy but something seems amiss there. What do you think? Do bankers still deserve a bonus even if the bank they work for loses a MASSIVE amount of money?

Weekend Reading

Here are a few great blog posts for you to enjoy from some of the best personal finance blogs around!

Mr.CBB over @ The Canadian Budget Binder talks about the cost and quality of childcare! ~ Daycare-You Are the Voice for Your Children

Pauline @ Reach Financial Independence shows us how to visit the UK on a budget ~ Bang for your buck, UK edition

Emily Guy Birken over @ One Smart Dollar talks about the rise of the 15 year mortgage ~ The Rise of the 15-Year Mortgage

Average Joe @ The Free Financial Advisor gives newbie investors some great tips ~ 5 Great Stock Buying Tips to Practice Today

Grayson @ Debt Round Up Shows that it’s not just UK savers who are getting hammered by low interest rates ~ America Saves Week – The Dwindling Savings Rate

Miss T @ Prairie Eco Thrifter explains why a glass half full is always best ~ Make Life Better for Yourself: Change Your Attitude

Matt @ Live Well on Less explains some new pension rules ~ New Rules on Pension Annuities

Have a great weekend everyone!

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8 Responses to The Euro Crisis & Bankers Bonuses ~ Dejavu Anyone?

  1. You know what, bankers likely make a lot of money and if the bank is out billions well why keep adding to the pile. Tough call, I guess. Thanks for sharing CBB mate…

  2. Re bankers bonuses there is so much rubbish being spoken and written both by politicians and bankers.

    In practice the banks have three alternatives:
    1) Obey the supposed directive,
    2) Ignore the directive because it is about pay and that is clearly outside the EU’s competence – it will be an interesting court case because the banks have far more money than the EU or
    3) pay the bonus up to the (probably inflated) salary and then pay extra bonus into off-shore trusts or somewhere outside the EU anyway.

    It is just posturing by the EU and UK politicians either way. In today’s world where not only people but money is totally portable, it is impossible and particularly stupid to make such pronouncements. Maybe some people fall for it but it really won’t make any difference.

    On the RBS issue, the most intelligent blog on banking and macroecononics by Frances Coppola takes the accounts to pieces at She shows that the core bank is actually very profitable and it is all historical issues, the Ulster Bank (registered in Ireland) and the once-off fines that have led to the large losses. There is still much to be done (and RBS has divested itself of all toxic ‘assets’) but it is actually been run rather well.

    The fact that Goodwin and friends are still at large and not in the Tower of London is a different matter of course:-).

  3. Laurie says:

    I agree, MB, it’s ridiculous that they should receive bonuses in a situation like that. Bonuses are like tips: not a given, but a kudos for good performance, and the RBS did NOT perform well. Great post!

    • Thanks Laurie. I was thinking about this again the other day and I don’t feel you can ignore past mistakes when making decisions on current bonus payments. That would be like saying to someone who is in massive credit card debt due to past mistakes that just because they’ve not overspent this year, they can now go out and buy a new car. In my opinion they should have waited to pay any bonuses until their past issues were completely resolved and the bank was at least generating a headline profit.

  4. Mary Rhodes says:

    The Euro Banking Crisis just reiterates the hypocracy the European Union are all about! I personally think the UK should leave the EU because the EU just gets in the way and creates more problems!

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